The ECB policy may not be suited to the taste of the German establishment, but it certainly is the reason why the eurozone escaped total collapse (and German savers did not lose their savings in the not-so-responsible German banks).Paul Krugman advocated for a straight keynesian fiscal policy in the eurozone and wage increases in Germany.Instead, the German establishment, including Mr Starck, Mr Schauble and Mr Gros, prove once again that it has no basic knowledge of macroeconomic mechanisms.If you want your country to be a net exporter, as Germany is, you need to find a net importer.If you want your country to be a net saver, as Germany is, you need to find a net borrower.Let the ECB do its job. It proved very fine so far.

In order to understand how “responsible” was the BCE and how much the EU, especially the EuroZone, were and is profiting from the BCE policies, it is sufficient to remind Dr. Stark and its supporter of this undisputable truth.Should the BCE had not led rates to zero, also starting the QE, nowadays the entire Euro construction should be just a “historical experiment”. Very probably, the EU too.I am guessing if it was just their desire. It is notorious that in 2012, Bundesbank was ready to a return to DEM. In the already “brexiter” City of London, most bankers were ready to that, too. Among the others, Gordon Brown (aka as “Gordon Clown”) intervening in a global financial meeting in Dubai in spring 2012 (I was living there at the time), openly stated that EMU was irremediably and irreversibly fated to the collapse, very soon.That seem enough to me.

And when with the risk-weighted requirements for banks they distort whatever credit allocation could have resulted from ultra-loose monetary policies, so much the worse. http://perkurowski.blogspot.com/2016/04/here-are-17-reasons-for-why-i-believe.html

When you consider just how destabilizing currency swings can be it is easy to see how a strong dollar could obliterate the global economy. It should not be a surprise in our current global economy that behind the curtain central bankers could be busy manipulating currencies so they trade in a narrow range that will not rock the boat. I contend they are keeping the dollar from moving higher.

Like many Americans, I have railed against our growing debt and questioned whether it would destroy the dollar, however, when looking at the miserable alternative currencies before us the dollar is without a doubt king. We must not underestimate the advantage the dollar has being the world's reserve currency or the size of debt floating across the globe comprised in dollar based agreements.

The recent stock market turbulence will have no impact on economic growth, precisely because very low rates for several years have considerably strengthened the strength of economic growth.It is only a prospect of normalization, faster, monetary policy with inflation expectations higher than expected that led to a correction of equity markets, welcome.

But are expectations of growth of the author's inflation relevant?Much larger wage increases are likely to occur, given the competition from low-cost countries.Moreover technological revolutions give considerable means to all consumers to compare and play the competition.

These errors of analysis of the causes of the recent turbulence do not prevent the author from committing others to the ultra-accommodative monetary policy of the ECB.

It has very positive structural effects, by transferring hundreds of billions of euros from state bond savers, wealthy individuals, elderly classes to young people and those who are able to borrow. This is the only serious drawback, ultra-accommodative monetary policy penalizes pensioners, but it is very constructive.

It is quite dangerous for Europe and for the world that people like the author can have important responsibilities in international institutions.

The author is basically proposing different discretionary monetary policies. But the problem is discretionary control itself. On the other hand, efforts to bind the process to rules would be equally ill-conceived. There is, however, the prospect of a coherent systematic solution – a Gordian knot-cutting alternative - that would not interfere with discretionary prerogatives (or require reforms per se of any sort) but would instead entail a sort of invisible hand entrainment dynamic, synchronizing such policies worldwide to a highly efficient, zero-latency external price (i.e. interest rate) discovery mechanism.

If the German establishment and their mouth speakers are not happy with the ECB and this despite all the good that the ECB has done to the German economy starting with the €1billion+ investment in the beautiful building that is shown in the image above, they can always pull out of it, no strings attached, and as a bonus they can also have Christine to manage their central bank or the ESM under whatever new form they wish since her aspirations to head the ECB or the EU Commission shall not come to fruition.

Panos, it is the Germans that are in denial as to the consequences of a common currency without transfers. German angst meanwhile is about their rapidly ageing demographic, lousy fertility rate at 1.4 and the pension time bomb due to explode in their face shortly

PZ, your understanding is only half true. The ECB policies are responsible but not the German CB. History has been written, you only need to look back and see how many heads rolled at the German CB after the 2008 financial crisis. Also, the German establishment attitude in the last decade or so has been totally irresponsible, inconsiderate, and this to say the least, especially when solidarity and understanding with the other EU countries was badly needed. There again, history has been written and you may wish to interpret it the way you wish. The ECB is not without its faults and made few mistakes when reacting to the financial crisis, but so did everyone else including and more especially the IMF and this with their own admission. There again history has been written. In any event, the latest German election results, recent opinion polls in Germany and in Italy should be sufficient proof as to what the electorates think of their establishments and of their economies, which the author of this article conveniently omitted from his analysis.

In my effort to help counter the blatant irresponsibility of not only..... but also, practically every leading economist worldwide- here PS- start interviewing and publishing this man's works-https://www.sciencedirect.com/science/article/pii/S1057521914001070

Thank heavens that the ECB has more sense than this author. Unemployment in Greece is still almost 21%. In Spain, 16.5%. In Italy, over 10%. These have come down from their peaks of a few years ago, but still represent many lives needlessly ruined.

This could have been ended ages ago with decent, Europe-wide fiscal policy, but with that precluded by ignorance and selfish fearmongering, monetary policy seems to be all we have left. Finally, it's starting to work, but the job is not done yet.

If the monetary policy can by itself propels real economic growth then we don't need governments and economic rules. All our problems can be solved by the CBs. But in reality Europe lacks the legislation which will promote innovation and business - as opposes financial - risk taking. Vested interest are too strong especially in the South. This cannot be solved by monetary policy, and the worse is that Eurozone countries understand this, but it is so politically comfortable to hide behind monetary policy. If it fails you blame the others if it is successful you are hero. So irresponsible and the recipe for disaster.

Panos, The EU is not an integrated market and that fragmentation is the problem with innovation. This is why the US is the home of the FANG stocks. To compete with the US population numbers are not enough and sadly the EU remains based on national ie individual members conflicts and rivalry and importantly national based markets. The mission was mis-sold to the various publics and when individual countries are having trouble building domestic consensus eg Germany's Bland Coalition, Italy's soon to be coalition, the UK's internally squabbling government, there is little chance of developing an EU wide strategy, particularly when acts of veto occur willy nilly. The ECB is the one thing that has held things together so far. I suggest you look at the youth emigration stats for the South, the youth unemployment rates, the deindustrialisation, the demographic, and the debt burden. As like it or not the model is the US, a common currency without transfers is literally a continental drift that will pull the EZ and therefore the EU apart and drive regional depopulation. Monetary policy to date has been a lifeboat

Eurozone fiscal policy has been missing in action since 2008. The only reason that there has been growth recently in Europe is because the austerity policies have been halted to allow 'centrist' parties in France and Germany to win elections. That has allowed loose monetary policy to finally have some effect.

One and a half years of growth in the Eurozone - is that too much for you Mr Stark? Now you think it's time to bring back the austerity knife. The ECB are not the irresponsible ones here. They are continuing their current policies because they know that between Macron and his 'reforms' and the german establishment they have not much left to stop the idiot political elites of Europe from plunging their countries back into the austerity vortex that they are barely keeping out of.

New Comment

Pin comment to this paragraph

After posting your comment, you’ll have a ten-minute window to make any edits. Please note that we moderate comments to ensure the conversation remains topically relevant. We appreciate well-informed comments and welcome your criticism and insight. Please be civil and avoid name-calling and ad hominem remarks.

Log in/Register

Please log in or register to continue. Registration is free and requires only your email address.

Log in

Register

Emailrequired

PasswordrequiredRemember me?

Please enter your email address and click on the reset-password button. If your email exists in our system, we'll send you an email with a link to reset your password. Please note that the link will expire twenty-four hours after the email is sent. If you can't find this email, please check your spam folder.